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XCan More Accessory Dwelling Units Fix LA's Housing Shortage?
Can more accessory dwelling units help a city with a chronic housing shortage?
A wave of new ADU startups that are based in L.A. or serving the region are betting on it. ADU companies like Otto (formerly known as Homestead), which focus on converting pre-existing structures (such as a garage) into housing, serve as a one-stop shop that will help homeowners with financing, design, permitting and labor. Other companies like Azure Printed Homes, Cover, United Dwelling and Villa Homes offer factory-built ADUs that are constructed off-site — also known as “prefab” ADUs. Others still, such as Cottage (based in San Francisco) partner with local contractors and help homeowners design, build and attain permits for their own custom ADUs.
ADUs (also known as granny flats, in-law apartments or backyard homes) describe a category of small, in most cases self-contained homes that can be built beside the original property. A prospect that’s currently trending in Los Angeles, where a chronic housing shortage and sky-high rents coupled with a 2017 state law forcing cities to relax their ADU regulations.
But as novice ADU builders soon discovered, constructing a small house isn’t a small task.
“I wouldn’t say [..building an ADU] is exactly easy, almost anywhere,” said Celeste Goyer, the policy director of Casita Coalition, an L.A.-based organization focused on expanding the use of ADUs for affordable housing throughout the state. “You can’t just go home and pick up a hammer, and have your cousin help you build your ADU. And so expectation management for everyone involved is important.”
The process of getting approved for an ADU normally takes months.
“Generally, many people struggle with the length and complexity of the permitting process and feel like their jurisdictions impose unnecessary red tape in the permitting process,” said Alex Czarnecki, founder and CEO of the custom ADU firm Cottage.
But a number of additional laws may make ADU construction easier in California. Last year Governor Gavin Newsom signed SB 9 into law, which allows California homeowners to build a second house on a single-family zoned lot. Another law known as AB 221 requires local authorities to act on ADU permit applications within 60 days otherwise it’s automatically approved.
“It’s common for certain municipalities to take longer than that to respond to an application or provide incomplete sets of comments,” said Czarnecki. “This drags out timelines for permitting and ultimately impacts the pace at which we can add housing.”
Despite the new laws, few homeowners, Czarnecki said, should attempt to build an ADU by themselves.
“The fact remains that the average homeowner is not a land developer and is not trained or prepared to oversee and manage the design and construction of a new unit on their lot,” added Czarnecki.
To that end, the heads of some ADU companies still believe more has to be done to improve financing the expensive building projects — as well as making them more affordable to low-income and moderate-income individuals. A typical prefab ADU ranges anywhere from $140,000 to $300,000. Custom ADUs are even more expensive. Converting a garage is cheaper, but in L.A., the process can easily approach six figures. None of which factors in the extra costs of permits, which ADU firm Modal estimates costs anywhere between $4,000 to $8,000 in Los Angeles.
There are few mainstream financing options for ADUs available, and renovation loans or cash-out refinancing often don’t cover the entire cost of the project. In a 2021 survey of homeowners by UC Berkeley, nearly 62% said they relied on cash savings or money from a friend or relative to pay for their ADU.
ADU advocates often tout it as an “affordable housing” solution — assuming that property owners will rent them out as an extra source of income. But with the median price of a single-family dwelling in L.A. County almost nearing $1 million, building an ADU is likely an opportunity reserved for more high-income individuals.
“Financing is really the only thing I think of that the city of L.A. and everywhere else really needs to work on. I think L.A. has been doing great with ADU use, and hopefully it will get better,” said Ross Maguire, CEO of Azure Printed Homes.
Samuel Schnieder, the CEO of Otto, said that ADU financing is a major barrier to expansion. Adding that, “It’s often a Catch-22 that the people who are the best equipped or the most enthusiastic about getting an ADU are the ones who can’t necessarily afford it.”
The California Housing Finance Agency this year began offering up to $40,000 in grants for such individuals, but it only covers new ADU “pre-construction” costs, which include everything from impact fees to permits to site prep. In Los Angeles, homeowners with an income below $180,000 qualify for such grants.
A total of 840 people in California have received grants since September — with all but a fraction receiving the full amount, a CHFA spokesperson confirmed to dot.LA.
First launched in 2019, Azure Printed Homes, based out of Culver City, relies on robotic printers to speed up the construction process. The company said it can 3D-print the walls of a 120-square foot unit in less than a day.
Maguire told dot.LA that Azure — which opened up reservations earlier this year — has received pre-orders for 167 units from 119 customers, totaling over $19 million in pre-orders.
But it’s unlikely you’ll see most of these units advertised as new rentals on Craigslist. Maguire says that most of Azure’s customer base desire an ADU to have more space for themselves or to house relatives, rather than to rent out as an additional source of income.
As such, some homeowners opt for factory-built ADUs instead of a more customized option, opting to shorten the timeline for inspections.
“Because our units are pre-approved with the State of California, there’s not a building and safety check that needs to happen on a local level with the city or county of L.A.,” Maguire told dot.LA..
However, even pre-fab ADUs have to be inspected on-site by the local planning authority. “(...the L.A.) Planning Department needs to look at how those modules interact with a specific site themselves, a process that can't be pre-approved as they are site specific,” confirmed a spokesperson for Azure.
In an effort to make the ADU permitting process faster, last year, the city of Los Angeles launched a set of “Standard Plans” that were pre-approved by LADBS. But such plans aren’t cheap — and won’t exempt homeowners from inspections.
“It should be noted that regardless of what pre-approved plan you choose, pre-approved plans still must go through the normal site-specific checks in order for the project to receive a permit,” said Czarnecki.
And if homeowners have the misfortune of building a Standard Plan ADU on an oddly-shaped lot or somewhere with atypical characteristics, they may have to go back to square one. In other words, their ADU will no longer be considered “pre-approved” and will have to go through the longer permitting process.
“Although the Standard Plans are a good jumping off point for creating a product that anyone can use -- at the end of the day, they’re mostly more expensive plans from what I’ve seen,” said Otto’s Schneider.
Casita Coalition and groups like California YIMBY are calling for better financing options for ADUs, particularly those that benefit individual cash-poor homeowners. At present, new ADUs are predominantly built in wealthier, whiter areas. In order for ADUs to actually help bridge the racial-wealth gap, policy experts say they have to actually be a viable option for the less affluent.
“I would be very pleased if more financing options [..for ADUs] developed from credit unions and community financial institutions to provide ADU-tailored loans to help lower income and moderate income home owners build ADUs,” Goyer told dot.LA.
Until then, the dream of Angelenos generating income from their backyards may remain just that.
- LA's ADU Culture Still Faces Financial Barriers - dot.LA ›
- United Dwelling Raises $10M to Address the Housing Shortage ... ›
- These Granny Flat Designs Are Pre-Approved in LA - dot.LA ›
- Meet the Culver City Startup Looking to 3D-Print ADUs in Under 24 ... ›
- Can New Tech and ADUs Solve LA’s Housing Crisis? - dot.LA ›
- What Will Take To Make Modular Homes Mainstream? - dot.LA ›
🔦 Spotlight
Hey LA,
As the city pushes through a record-breaking March heat wave, one of the week’s most interesting LA startup stories came with a reminder that climate tech gets a lot more real when it leaves the pitch deck and hits the water. In Arc’s case, that means tugboats.
LA based Arc, founded in 2021 by a team of SpaceX alumni, announced a $50M Series C this week, led by Eclipse, a16z, Menlo Ventures, Lowercarbon, Necessary Ventures, and Offline Ventures, as it pushes deeper into commercial maritime. The raise follows Arc’s $160M contract with Curtin Maritime to deliver eight hybrid-electric tugboats beginning at the Port of Los Angeles, with the first expected to hit the water this year.

That feels notable not just because of the funding, but because it marks a clear evolution in Arc’s business. What started as a premium electric boat company is now making a serious push into the industrial side of maritime transportation, with ambitions spanning tugboats, ferries, and defense vessels.
There is also something fitting about this story happening in Los Angeles. This is a city known for spectacle, but Arc is building in a category where performance actually has to perform. No amount of branding can fake a working tugboat, and that is exactly why this moment feels worth paying attention to.
Now, onto this week’s LA venture deals, fund announcements and acquisitions.
🤝 Venture Deals
LA Companies
- Talino closed a $7.5M Series A led by Chemonics International, with participation from Mt Sinai Capital and Gulf Blvd, as it shifts from a venture studio into what it calls a global fintech foundry. The company said the new funding will help build an API-first cross-border payments infrastructure layer connecting the U.S. with emerging markets, starting with the Philippines, where it is targeting faster, more compliant financial product launches and modernizing legacy rails with stablecoin and real-time payment capabilities. - learn more
- PADO AI raised a $6M seed round led by NovaWave Capital to expand its AI-powered orchestration software for mid-market colocation data centers. The company said the funding will support product delivery and global growth as it helps operators better manage power, compute, cooling, and distributed energy resources to increase GPU utilization and maximize “compute per megawatt” without requiring major new infrastructure buildouts. - learn more
- Meadow Memorials raised a $9M Series A led by Lachy Groom and Haystack to expand its software-enabled funeral planning platform, which lets families arrange services online or by phone. Founded in 2024 by former Stripe executive Sam Gerstenzang and Emma Gilsanz, the company says it is using a real-estate-light model to offer lower-cost funerals as it expands beyond California into states including Texas, Washington, and Arizona. - learn more
LA Venture Funds
- Anthos Capital participated in Bluesky’s $100M Series B, which was led by Bain Capital Crypto and also included Alumni Ventures, Bloomberg Beta, Knight Foundation, and True Ventures. The company said the round gave it the resources to scale both the Bluesky app and the broader AT Protocol ecosystem, which it says has grown to more than 43 million users and now supports a fast-expanding network of third-party apps and developers. - learn more
- Navigate Ventures participated in VerbaFlo’s oversubscribed $7M seed round, which was led by Pi Labs and also included Haatch and Old College Capital. VerbaFlo said it plans to use the funding to scale its conversational AI platform for real estate operators, building on traction across more than 200,000 units and expanding further into markets including the U.S., Middle East, and Australia. - learn more
- March Capital participated in Xage Security’s $15M equity financing round, which was led by Piva Capital as the company posted 81% year-over-year revenue growth and expanded its Zero Trust platform for AI and critical infrastructure. Xage said the funding, which closed in December 2025, will support go-to-market expansion and continued product innovation, including new AI security capabilities, as demand grows across sectors such as energy, manufacturing, utilities, transportation, and defense. - learn more
- B Capital led Knox Systems’ $25M Series A, backing the company’s push to scale what it says is the largest AI-managed federal cloud and dramatically shorten the FedRAMP authorization process for software vendors. Knox said the new funding will help accelerate growth after its June 2025 seed round, with the goal of helping customers achieve FedRAMP authorization in as little as 90 days at roughly 90% lower first-year cost, while expanding adoption across both government and commercial environments. - learn more
- WndrCo participated in Tenkara’s $7M round, which was led by True Ventures as the company builds AI-powered operations agents for American manufacturers. Tenkara said it is creating tooling to help factories handle sourcing and operational work more efficiently at a time of rising supply-chain pressure, with backing from a broader investor group that also included Articulate Capital, Night Capital, HF0, SF1, and Transpose Platform. - learn more
- Aurora Capital participated in Niv-AI’s $12M seed round, backing the startup alongside Glilot Capital, Grove Ventures, Arc VC, Encoded VC, and Leap Forward as it emerged from stealth. Niv-AI is building sensors and software to measure millisecond-scale GPU power surges and help data centers use electricity more efficiently, with plans to deploy its system in a handful of U.S. facilities within the next six to eight months. - learn more
- Clocktower Technology Ventures participated in Fuse’s $25M Series A, which TechCrunch reported was led by Footwork, Primary Venture Partners, NextView Ventures, and Commerce Ventures, with Fuse also naming Clocktower Ventures among its backers. The company said it plans to use the funding to expand its AI-native loan origination and account opening platform for credit unions, building on traction with more than 100 customers and a $5M “rescue fund” aimed at helping institutions switch off legacy systems. - learn more
- Kairos Ventures participated in Alomana’s €4M seed round, which was led by CDP Venture Capital and also included Founders Factory, Italian Angels for Growth, Club degli Investitori, and others. Alomana said it will use the funding to strengthen its enterprise AI platform, add more capabilities for autonomous workflow automation, and support larger deployments across Europe as demand grows in sectors like finance, manufacturing, and pharma. - learn more
LA Exits
- Optimal’s Entertainment Media division is being acquired by Capstone Point Holdings, with the business set to operate under its legacy name, Optimad Media, following the deal. The transaction keeps founder Kevin Weisberg in place to lead the company from Los Angeles, while giving Optimad more backing to expand its entertainment media planning, buying, and prints-and-advertising investment capabilities across theatrical, streaming, and broadcast campaigns. - learn more
Inside Tinder’s Biggest Product Shift in Years
🔦 Spotlight
Hello Los Angeles,
Despite headlines about swipe fatigue and dating app burnout, Tinder believes the problem isn’t that people are tired of dating. They’re tired of bad dating experiences.
So it felt fitting that Tinder chose the El Rey Theatre in Los Angeles, a venue known for reinvention, to make its case that the category is far from over.
Walking into the El Rey, it was clear Tinder wanted this to feel less like a tech launch and more like a cultural moment. Music was bumping, the room buzzed with chatter and excited energy, red light beams cut through the room, and chandeliers glowed overhead.
At Tinder Sparks 2026: Start Something New, Match Group and Tinder CEO Spencer Rascoff took the stage to outline what the company calls the biggest evolution of the app in years. Tinder remains the largest dating app in the world, used by tens of millions of people across more than 185 countries and responsible for billions of matches every year.

Rascoff framed the shift around a broader cultural reality. In a world where people increasingly interact with machines, technology and AI, the need for real human connection has not gone away. If anything, Tinder believes it has only grown stronger.
To respond to that shift, Tinder says it’s focusing on what it calls “sparks,” the moments when a match actually turns into a real conversation.
As Rascoff put it on stage:
“We are not optimizing for swipes or likes. We are optimizing for sparks.”
That philosophy is shaping a wave of new features discussed throughout the keynote by Tinder’s leadership team, including Mark Kantor, SVP and Head of Product, Yoel Roth, SVP of Trust & Safety, and product leaders Claire Watanabe and Hillary Paine.

Among the updates are Music Mode, which lets users connect through shared songs and artists, and a new Astrology Mode that highlights compatibility between zodiac signs. Tinder is also leaning further into social dating with Double Date, a feature that lets friends match with other pairs together. The feature is already gaining traction with Gen Z users, reflecting a broader shift toward more social and lower-pressure ways to meet people.

Tinder is also redesigning profiles to help users express more personality. New tools can surface stronger photos from a user’s camera roll, improve lighting, and highlight interests more visually, while integrations with platforms like Spotify, Duolingo and the restaurant app Belly bring more of a person’s real life into their profile.

But the most interesting experiment might be happening right here in LA. Tinder is launching IRL Events in the city, letting users browse and RSVP to real-world meetups directly through the app. Think coffee shop raves, trivia nights and pickleball tournaments. The idea is simple. Dating works better when it feels like a social activity instead of an interview.

Under the hood, Tinder is also leaning more heavily on AI to improve recommendations. New tools like Learning Mode and Chemistry aim to better understand what users are actually looking for and surface stronger matches faster. At the same time, the company is investing heavily in safety, expanding Face Check, a facial verification system designed to reduce bots and impersonation accounts.
Closing out the presentation, Melissa Hobley, Tinder’s Chief Marketing Officer, zoomed out from the product roadmap to the brand’s cultural footprint, noting that Tinder is mentioned in billions of TikTok videos and has become shorthand for how younger generations talk about dating.
Taken together, the updates represent Tinder’s most significant evolution in years. And judging by the energy inside the El Rey this week, the company believes the next chapter of dating will be more social, more expressive and more intentional. It’s a shift being shaped right here in Los Angeles, and one that could redefine how the next generation meets.
Now onto this week’s LA venture deals, fund announcements and acquisitions.
🤝 Venture Deals
LA Companies
- Hurray’s GIRL BEER raised a $5M seed round led by Lakehouse Ventures, with participation from Spice Capital plus CPG insiders and entertainment executives, as it accelerates national expansion. The LA-based flavored light beer brand says it has already landed retail placements at Walmart, Kroger, Albertsons, and Whole Foods, and plans to use the new capital to deepen distribution, enter new markets, and ramp up marketing, alongside a rollout of seven new flavors. - learn more
- Freestyle closed a $10M Series A led by Silas Capital, with significant participation from ECP Growth. The company also noted continued backing from existing investors including Mucker Capital, Adapt Ventures, and Superangel, as it scales its premium diapers and wipes business following nationwide launches at Walmart and Target. - learn more
- MAX BioPharma announced a new investment and partnership with Technomark Life Sciences to advance Oxy210, its oxysterol-based, orally available drug candidate for MASH. Technomark is joining as a strategic lead investor by participating in MAX BioPharma’s $13M Series A to fund a Phase 1a/1b first-in-human study, and the companies say the collaboration will pair MAX’s therapeutic platform with Technomark’s drug development experience. - learn more
LA Venture Funds
- B Capital participated in ORO Labs’ $100M Series C, which was led by Brighton Park Capital and Growth Equity at Goldman Sachs Alternatives, as the company pushes deeper into what it calls agentic procurement orchestration. ORO said the new funding follows 300% revenue growth over the past year and will be used to speed up product development, expand go-to-market and customer teams globally, and broaden enterprise use cases across procurement, finance, legal, and supply chain workflows. - learn more
- Aliment Capital participated in Tropic’s oversubscribed $105M Series C, which was co-led by Forbion’s Bioeconomy Fund and Corteva as the company scales the commercial rollout of its gene-edited tropical crops. Tropic said the funding will help expand production of its banana portfolio, accelerate its banana and rice pipelines, and support entry into additional climate-resilient crops, following the 2025 launch of its first new banana varieties in more than 75 years and demand that is already outpacing supply. - learn more
- B Capital doubled down in Axiom’s $200M Series A, which valued the company at more than $1.6 billion and was led by Menlo Ventures. Axiom said the new funding will help it extend its lead from formal mathematics into what it calls “Verified AI,” with plans to apply its technology beyond mathematical discovery into software and hardware verification. - learn more
- WndrCo participated in Quince’s $500M Series E, a round led by ICONIQ that values the manufacturer-to-consumer retail platform at $10.1B post-money. Quince says it will use the fresh capital to accelerate growth and global expansion of its proprietary M2C operating system, which uses AI-driven demand forecasting and direct factory partnerships to cut traditional retail markups. Other investors in the round included Basis Set Ventures, Wellington Management, MarcyPen Capital Partners, Baillie Gifford, Notable Capital, and DST Global. - learn more
- Matter Venture Partners co-led Eridu’s oversubscribed Series A, part of $200M+ raised as the AI networking startup emerges from stealth to tackle what it calls the “network wall” bottleneck in AI data centers. - learn more
- Matter Venture Partners participated in Rhoda AI’s $450M Series A, backing the startup as it comes out of 18 months in stealth with FutureVision, a video-predictive control platform aimed at helping robots operate reliably in messy, real-world industrial environments. The round included a large syndicate of investors, including Capricorn Investment Group, Khosla Ventures, Leitmotif, Mayfield, Premji Invest, Prelude Ventures, Temasek, Xora, and John Doerr, and the company says the funding will accelerate development and industrial deployments. - learn more
- Halogen Ventures participated in Rasa Legal’s $5M late-seed round, backing the company’s push to scale its tech-enabled criminal record sealing and expungement service nationwide. The round was led by Rethink Education with participation from Social Finance and the Richard King Mellon Foundation, and Rasa says the funding will help it expand leadership, speed product development, and grow beyond its current footprint (Utah, Arizona, and Pennsylvania). - learn more
- Halogen Ventures participated in Nyad’s $1.3M oversubscribed pre-seed round, backing the Birmingham-based startup as it launches an AI decision-support tool for wastewater treatment operators. The round was led by Boost VC with participation from Draper Associates, Ollin Ventures, Apprentis, First Avenue Ventures, and strategic angel Troy Wallwork, and Nyad says it will use the funding to hire, grow customers, and keep building the product as retirements thin the wastewater workforce. - learn more
- MANTIS VC participated in Scanner’s $22M Series A, which was led by Sequoia Capital and also included CRV, as the company builds a high-speed security data layer for AI-driven threat investigation. Scanner said the funding comes as security teams at companies like Notion, Ramp, and BeyondTrust use its platform to search years of log data quickly and power agentic workflows that help hunt threats, triage alerts, and investigate incidents more efficiently. - learn more
- Chapter One participated in Zcash Open Development Lab’s $25M+ seed round, joining a syndicate that included Paradigm, a16z crypto, Winklevoss Capital, Coinbase Ventures, Cypherpunk Technologies, and Maelstrom. The new company, formed by former Electric Coin Company team members, said the funding will support continued development of privacy-focused infrastructure for the Zcash ecosystem, including its self-custodial wallet and broader shielded payments tooling. - learn more
- CIV participated in Isembard’s $50M Series A, which was led by Union Square Ventures and also included Tamarack Global, IQ Capital, and existing backer Notion Capital. Isembard said the new funding will help it open 25 AI-powered factories by the end of 2026, expand its engineering team, and enter Germany, France, and Ukraine as it scales software-driven component manufacturing for aerospace and defense customers. - learn more
- WndrCo participated in Crafting’s $5.5M seed round, which was led by Mischief as the startup launched general availability for Crafting for Agents. The company said the new capital will support its push to become core infrastructure for AI-driven engineering teams, giving agents secure access to production-like environments so they can validate, test, and ship code inside complex enterprise systems used by customers including Brex, Faire, and Webflow. - learn more
LA Exits
- Hireguide has been acquired by HireVue, which is buying Hireguide’s underlying technology and bringing the Hireguide team into HireVue’s product org. HireVue says the deal accelerates its agentic AI roadmap, starting with a voice-based AI interviewer designed to help employers qualify candidates earlier and run smarter, more conversational hiring workflows. - learn more
- Ultracor has been acquired by Applied Aerospace & Defense, bringing the California-based maker of specialized honeycomb core materials into Applied’s advanced composites platform. Applied says the deal supports its selective vertical integration strategy by strengthening supply chain control and boosting speed and capacity for space and defense programs, from satellites and missiles to antennas, radomes, and next-gen aircraft. - learn more


